Don’t forget ethics when setting incentive pay targets

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Here’s a note from Alison Taylor about this WSJ article:

Turns out that if you are made head of HR at a large public company, you are supposed to deal with sexual harassment at the top. And if you not only let the CEO do whatever he likes, but are **widely accused of sexual harassment yourself** Delaware judges won’t be impressed.

This new litigation featuring McDonalds shows that executives can now be liable for violating fiduciary duty, not just directors. Still doesn’t mean anyone is going to jail. But it’s a big ramp up in personal accountability for senior leaders, and could have a dramatic impact on culture in the C suite.

This is also an interesting story given that senior leaders had 15% of their bonuses tied to HR goals. Im going ahead and assuming these were all diversity and performance related and did not encompass ethical obligations. This is not the way to incentivize ESG! See this Financial Times article for more.

Between this and the end of NDAs, might this also prefigure a huge shift in how we think about and treat HR?